Recently Lok Sabha, approved the banking amendment bill which facilitates raising a cap on voting rights and gives more regulatory power to the Reserve Bank of India.

Interestingly PSU union is going on strike today against the Banking reform bill.

According to RBI report India’s 26 state-run banks account for 76 per cent of the nation’s outstanding loans, 20 private domestic lenders had a 19 per cent market share and 40 foreign lenders accounted for the remaining 5 per cent as on March 31, 2012.

Some broking houses have initiated a buy on yes Bank Ltd., ING Vysya Bank Ltd. and Kotak Mahindra Bank Ltd at the current rate owing to the reforms. L&T finance, Sundaram Finance and Reliance capital were covered by some other brokers on the speculation that new banking license would benefit these non banking finance companies. Is it wise to buy them now?

You may reread yesterday’s post which could help a lot in deciding if we have to buy the banking stocks now. Stocks like L&T finance are similar to hyped Apple as it does not have valuation right now. In fact, in our opinion some of the stocks are highly valued and could be bought in the second half of 2013 once the hype dies down. However, Technical investors may take it on the basis of charts carefully water marking the entry and exit price. There may be some mergers and acquisitions (M&A) which could open up some interesting buy candidates. We would inform on the same when opportunities arise.

What to expect from the market now?

We do not think that the Nifty has enough steam to go above 6000 right now. Today, the winter session of the Parliament session is coming to an end which means there will not be any favorable news flow to the market. FII's may rest for a while starting from Monday which would reduce the liquidity flow to the market. Right now we would not like to participate in the market; however intelligent traders may make decent money as there are plenty of trading opportunities thrown up by the market. Investors may rest for a while and look out for good correction to enter into the market.